The Hindu Business Line : On hope and prayer into 2008

The multiple responses of Rural India to the SEZs, the latest being that of the Goa government, measure the distance that New Delhi must travel toward the other half of the economy, says ASHOAK UPADHYAY.

A recent anti-SEZ dharna at Panaji, Goa…The State Government’s decision to scrap all the SEZ projects it had planned was unique.

No policy (and there have not been many) of the UPA Government has elicited such unanimous consent from one segment in the economy and such varied responses from others as the Special Economic Zones Act of 2005. On the last day on 2007, the Goa Government publicly scrapped all the SEZ projects it had planned, asked the Centre to similarly do away with the three that had been notified, and sat back wondering how it was going to deal with developers who had bought the land, some of it through the offices of the government itself.

The decision to do away with SEZs was unique on various counts; for one, it was a Congress-led coalition government that took it; for another, it was prompted by a popular agitation against the zones, an agitation that threatened to spoil the New Year celebrations in a state that owes much of its revenues and private incomes to tourism.

But it was most unique because of the varied manner in which non-Urban India particularly, landholders, have reacted to the SEZ phenomenon across the country, some seeing it as a threat, others as an opportunity. In West Bengal and Orissa, the violence that erupted early last year and kept flaring till its flashpoint later was matched by an eagerness of the farmers in western Maharashtra that saw in the SEZs and township development an opportunity for alternative sustenance.

On the outskirts of Pune City, in the suburb of Hadapsar, the Magarpatta township stands testimony to the initiative of the Magars, a farming community that felt threatened by the city’s expansion and insecure at the idea of individually selling lands to builders. So they formed a corporation with the 400 farmers staking a claim on the basis of their landholdings. Magarpatta city that houses leading hi-tech firms is a residential-cum-commercial complex owned by the Magars that secures a constant stream of income for the shareholders even as the second generation enjoys the resources to plan their own livelihood — either as entrepreneurs or skilled labour.

That pioneering effort predated the SEZ Act but its lessons have not been lost on farmers and villages in Ratnagiri that have opposed an SEZ; slightly late in the day they have petitioned the State government to let them do a Magarpatta. And the idea is catching elsewhere in the region.

Hints of sons of the soil

The rejection of the SEZ style of development by the Goa government is the third archetype; a popular agitation that stopped short of violence probably because the government, sensitive to the timing of the protests, found it prudent to listen. Unlike West Bengal where the Left Front is desperate to find sustainable means of livelihood and employment for the poor bargadars scrapping through on their patchy strips, Goa is rich through tourism, remittances from West Asia and natural resources.

The rejection of the SEZ was accompanied by an undertone of gentle xenophobia; the government is planning to study the Uttaranchal and Himachal Pradesh policy of restricting ‘outsiders’ from buying huge tracts of land.

The SEZ as Land Grab

If that inward-looking tendency catches on, its worst consequences will be felt across the country as one backward state after another finds consolation in this distorted and ultimately self-defeating form of development.

sTo a large extent, the SEZ will be viewed as the villain simply because it has been identified in the popular imagination as government-blessed land grabs. Two aspects of the recent past have contributed to this growing suspicion of the SEZ in almost every part of the country barring, perhaps, western Maharashtra and Tamil Nadu.

The first is the searing pace of growth and wealth creation that has exacerbated income and regional inequalities and their social consequences on the urban rural divide. The second is a policy that appeared the quickest route to rapid growth in a country beset by poor infrastructure, high taxes and lengthy red tape. If China used the SEZ vehicle to launch itself onto the superhighway why not India, so the argument went.

But in 2005 when the Act came into force, the SEZ had lost its relevance because the country was already the second fastest growing economy in the world after China — without the SEZ. No one was complaining of high import duties because they were being phased down. Infrastructure? That did not pose a problem for exports with over 24 per cent — without SEZs; manufacturing’s salad days had arrived — also without the SEZs and with rising inflation.

So the general economy without the privileges that the SEZs promise did extremely well. Infrastructure roadblocks were bypassed by the organised economy responding to the reforms of the late 1990s and post-2000.

But the next phase of growth that will depend on new capacity creation is quite another matter. More power is needed; better roads, more ports and airports. All these require fresh land.

Which means an appropriate land acquisition policy and an appreciation of the fact that the land market is illiquid not simply on account of murky title deeds and antiquated land records but also because the farmer will not part with his asset easily. More than two years after the SEZ Act, amendments to the Land Acquisition Act that would, arguably update it, has yet to come into effect.

After all the violence that has marked attempts, either by the state or investors to acquire lands, there has been no attempt to carry the discourse of the new industrialisation to the farmer, at this juncture, the most important stakeholder; the discussion on the benefits of the SEZs even for the farmers have been urban-centred.

Not surprisingly, the vacant space has been filled by anti-social elements, Naxalites and regional groupings such as the Trinamool Congress that mix their own agendas with the confused anger of small landholders and the unemployed into an antagonistic and, at times, violent brew.

On hope alone

The UPA government enters its most crucial period of its term with hope and perhaps a prayer that its past successes will stand it in good stead by 2009. But how will it? The only constituency that has reacted favourably to New Delhi’s robust optimism has been the one that needs it least; the organised economy was already speeding along in 2004 and has continued to do so to the applause of the policymaker.

For the other half that has stayed behind in a sector with negative to 3 per cent growth and all the attendant deprivations, the UPA Government has far offered little more than rhetoric-laced allocations for projects that are dismally behind schedule.

With a whole year ahead of it, the UPA government needs to think of ways it can talk with the rural household like it has never done before.

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